Royal Caribbean and other cruise lines tumbled on Thursday after a U.S. official said the cruise industry avoids U.S. taxes. Many cruise line stocks undercut key support near buy points.
Howard Lutnick Warns Of Crackdown
On a Fox News interview late Wednesday, Commerce Secretary Howard Lutnick suggested the Trump administration would crack down on unpaid taxes by cruise line companies.
"You ever see a cruise ship with an American flag on the back?" Lutnick said during the interview.
"None of them pay taxes ... every supertanker. None pay taxes ... all foreign alcohol. No taxes. This is going to end under Donald Trump," Lutnick warned.
Cruise Line Stocks Sink Below Key Levels
Shares of Royal Caribbean stock sank 7.7%, to 243.80, on the stock market today. Norwegian Cruise Lines and Carnival Cruise tumbled 5%-6% each.
Viking Holdings gave up 3%, paring losses into the close.
Among those cruise stocks, Royal Caribbean, Norwegian and Carnival each undercut their 50-day moving averages in big volume on Thursday. Viking stock bounced off support near the 50-day line.
All the cruise line stocks broke out to highs in mid to late January. Those cruise line breakouts came amid strong earnings, solid outlooks and signs that younger Americans are flocking to cruises. The cruise stocks have now fallen below the buy points.
Sell-Off A 'Massive Overreaction': Stifel
One equity research firm said the sharp cruise stock sell-off was hugely overdone.
This is "probably the tenth time in the last 15 years we have seen a politician talk about changing the tax structure of the cruise industry," Stifel analysts said. "Each time it was presented, it didn't get very far."
The pullback on Lutnick's "misinformed" tax comments is a "massive overreaction," the analysts added.
Stifel analyst Steven Wieczynski has a buy rating on Royal Caribbean, with a $310 target on the cruise line stock, FactSet shows.
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